Question

In: Accounting

Please answer asap and double check, thanks! Pato Company produces leather sandals. The company employs a...

Please answer asap and double check, thanks!

Pato Company produces leather sandals. The company employs a standard costing
system and has the following standards in order to produce one pair of sandals:

                    standard quantity              standard price
direct materials     2 leather strips              ?? per strip
direct labor         2.5 hours                     $10 per hour
variable overhead    2.5 hours                     ?? per hour

During May, Pato purchased leather strips at a total cost of $124,520 and had
direct labor totaling $117,100. During May, Pato used 18,790 leather strips in
the production of sandals. Pato had no beginning inventories of any type for
May. At May 31, Pato had 780 leather strips remaining in its direct materials
inventory.

Pato Company reported the following variances for May:

  Direct material price variance ..............  $7,100 unfavorable
  Direct labor rate variance ..................  $29,500 favorable
  Total direct labor variance .................  $8,900 unfavorable
  Variable overhead spending variance .........  $2,440 favorable
  Variable overhead efficiency variance .......  $34,560 unfavorable

1. Calculate the number of pairs of sandals produced by Pato Company in May.

2. Calculate Pato's direct material quantity variance for May. If the variance is favorable, place a minus sign in front of your answer (i.e., -5000). If the variance is unfavorable, simply enter your answer as a number (i.e., 5000).

3. Calculate the actual variable overhead cost incurred by Pato Company in May.

Solutions

Expert Solution

Data availabel
Standard for 1 unit
Direct material Standard 2 leather strips @ ??
Labour 2.5 hour @ 10 per hour
Variable overhead 2.5 hours @ ??
Total purchases 124520 $
Total units 19570 (18790+780)
(units used + in stock)
Cost per unit of material 6.3628 (124520/19570)
Total direct labour cost 117100 $
Direct material price variance 7100 unfavourable
Labour rate variance 29500 favourable
Total labour variance 8900 unfavourable
Variable overhead spending 2440 favourable
Variable overhead efficiency 34560 unfavourable
1 No. of pairs produced
Labour efficiency variance =(total labour variance - labour rate variance)
Labour efficiency variance =(8900-(-29500))
38400 Unfavourable
Labour rate variance = (actual cost of labour) - (standard rate * actual qty)
-29500 =117100-(10*actual labur hours)
Actual labour hours 14660 hours
Labour efficiency variance =(actual hours - standard hours for actual units)standard rate
38400 =(14660 -stadrd hours)10
Standard hours 10820 hours
No. of units produced =standard hours / hours per unit
=10820/2.5
4328 units
2 Material quantity variance =(actual input - standard material for actual output)standard rate*
=(18790 - (4328*2))5.9849
60650.98 Unfaourable
*standard rate
Material price variance =(actual rate - stadrd rate) actual qty
7100 =(6.3628-standard rate)18790
Standard rate 5.9849
3 Acutal variable overhead cost
Variable o/h efficiency variance = (actual hours - std hrs) * std Rate
34560 =(14660-10820)* std rate
Std rate 9
Variable o/h spending variance =Actual variable o/h- (actual hrs*std rate)
-2440 =Actual variable o/h -(14660*9)
Actual variable o/h 129500

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